Programming Warner’s future

Jan 21, 2002  •  Post A Comment

A quickly evolving television landscape has kept Warner Bros. Television Group Executive Vice President Bruce Rosenblum on the cutting edge of the new millennium of television deal making. With oversight of all of Warner Bros.’ vast television operations, including Warner Bros. Television, Telepictures Productions, Warner’s animation television operations and the studio’s three television distribution operations, the executive is forging new business paths in the changing economic climate.
After beginning his career as an entertainment attorney in 1982, Mr. Rosenblum moved to Lorimar Telepictures before the company was bought by Warner Bros. in 1989. He played a key role in the formation of The WB Network, acquiring “Pokemon” for Kids’ WB, bringing Rosie O’Donnell into the talk-show fold and establishing record license fees for series such as “ER,” “Friends” and “The Drew Carey Show.”
Recently, Electronic Media sat down with Mr. Rosenblum to discuss the direction of the content behemoth in the new economy. An edited transcript follows:
EM: How is Warner Bros. dealing with escalating production costs vs. declining network license fees? How will future deals be affected?
Bruce Rosenblum: Part of that has been masked the past few years because international revenue was escalating. As long as you had enhanced revenue, you were able to offset the production costs. We’re now facing a situation where down the road, our network revenue will start coming down through a new deal-making process. Our international revenue will potentially discontinue its rapid increase, and then we are truly faced with a situation where we must find a way to bring production costs down.
The first place where we’re going to face this is the upcoming pilot season. We believe you will see a situation where the writing staffs will not be paid as much this year as they were paid in prior years. We believe you will see a situation across the board where the talent in front of the camera will not be paid as a group as much as in previous seasons. We need to look at the structure of agency package commissions and whether, in light of the economic realities we are facing, we need to create a new business model with the talent agencies on their packages. We need to recognize, however, that the talent agents need a proper business model as well for them to survive. There may be a creative way to jigger the commissions and keep all of us successful.
EM: Warner Bros. continues to be a major player in the syndication arena even without station ownership. How difficult is it becoming to clear shows in an ever-more consolidated environment?
Mr. Rosenblum: The challenge of placing first-run syndicated television programs on stations in an environment where we don’t have stations is the status quo for AOL Time Warner. More challenging in the last couple of years is that consolidation has limited the number of buyers, be it Fox stations or Tribune stations, which have become stronger over the last couple of years. As a result, our strategy for attaining real estate has been twofold: The first is to produce the best-quality first-run syndicated programming we can. By making the programming as appealing to the audience as we can, the more opportunity we have to place our programming on other stations.
The second step is the creative deal making. The evolution in the last couple of years that we’ve experienced is our need to be as flexible as we can in structuring our business deals with these station groups. Companies that are in our position are aware of the need to give the station group more upside in the programs that they’re buying.
EM: What are the biggest challenges facing syndicators today?
Mr. Rosenblum: The first challenge certainly is to improve the advertising market. So much of our revenue in the first-run market is driven by the sale of barter time, and if we can withstand this downturn, and if there is a light at the end of the tunnel, be it two or even three years from now, that’s certainly the No. 1 challenge. The second is successfully forecasting where audience tastes are going to be two, three or four years from now.
EM: Warner Bros. and ABC recently announced an innovative repurposing deal for the series “The Court.” What is the significance of the deal as a precedent setter?
Mr. Rosenblum: The significance of “The Court” deal is less about the specifics of that repurposing deal and more about the recognition of the economic environment the broadcast networks are currently facing. The broadcast networks are facing an economic downturn in their revenue as a result of the advertising cutbacks as well as studio suppliers that are insisting on equal if not greater license fee revenue than in prior years. … It was a win-win-win for the broadcast network, the studio and the creative community.
EM: Warner Bros. has scored a number of successes recently in cable, from first-run such as “Witchblade” on TNT to off-net sales of “The West Wing.” What kind of opportunities does the company see in the cable realm?
Mr. Rosenblum: The opportunity to create and produce original programming for basic cable networks is an important piece of our ongoing strategy to build our television group. Having said that, it’s important that each of the basic cable networks, along with their studio partner, find a business model that creates incentives for the studio to finance the deficit of the project during the show’s early years as they build what is hopefully a successful franchise. What we are finding is that the basic cable networks are positioning themselves where they are attempting to acquire franchise properties to build their identities. There is a good amount of competition among the basic cable networks to obtain these properties and, in light of the economic challenges facing us, there is a small light at the end of the tunnel if we can deliver product that delivers sufficient ratings for these cable networks to justify the prices.
EM: We’ve seen NBC and Fox pull out of the Monday-through-Friday kids business by leasing their time to other companies. Where will Warner Bros. take its own kids franchises?
Mr. Rosenblum: Kids’ WB has certainly built a business in the last six or seven years that puts them at the top of the class of the broadcast networks. Their ability to deliver programming to their target audience on a Monday-through-Saturday basis gave them a significant advantage over NBC. Moreover, their creative team has successfully selected product that appeals to their target demographic. Their marketing machine is as good as anybody’s. Now that they are more closely aligned to their sister cable channel The Cartoon Network, they together should be able to present a more unified, cohesive front as they battle Nickelodeon in the war for the loyalty for their target demo. A priority for Warner Bros. is an entrance into the preschool arena. This is an important business for us in that it supports home video [and] licensing. It’s a demo we have not attacked in the recent past, and we will be working carefully to build the preschool block programming.